The U.S. stock market is slipping Thursday after oil prices rebounded and cranked up the pressure from the bond market.
The S&P 500 fell 0.4 per cent and is on track for a fourth drop in five days after setting its all-time high. The Dow Jones Industrial Average was down 253 points, or 0.5 per cent, as of 9:35 a.m. Eastern time, and the Nasdaq composite was 0.4 per cent lower.
A halt in the torrid run for stocks benefiting from the artificial-intelligence boom has slowed the U.S. market recently. Not even another blowout profit report from Nvidia was enough to get it going.
The chip company on late Wednesday reported much stronger profit and revenue for the latest quarter than analysts expected, while also forecasting revenue for the current quarter that cleared analysts’ estimates. “The buildout of AI factories — the largest infrastructure expansion in human history — is accelerating at extraordinary speed,” CEO Jensen Huang said.
Such performances and such talk have become routine, though, and Nvidia’s stock swiveled between losses and gains before climbing 1.1 per cent.
Some analysts said the muted reaction may have simply been because investors were locking in profits after Nvidia’s stock had soared nearly 70 per cent over the prior year, more than double the S&P 500’s 27 per cent jump. Regardless of the reason, Nvidia may have less power than before to move the market by itself.
The broad AI industry is getting criticism for becoming too expensive, as well as too circular as Nvidia has bought ownership stakes in companies that use its own chips that drive Nvidia’s revenue.
Pressure built on Wall Street, meanwhile, as the price for a barrel of Brent crude oil climbed 3.4 per cent to US$108.54 and trimmed much of its loss for the week. Oil prices have been swinging up and down with uncertainty about how long the war with Iran will keep the Strait of Hormuz shut, which is preventing oil tankers from exiting the Persian Gulf to deliver crude.
A report also gave the latest signal that the U.S. job market remains in better shape than economists expected, even with all the pressure from high oil prices and widespread discouragement among U.S. households about the economy. The number of U.S. workers applying for unemployment benefits last week unexpectedly declined in an indication of fewer layoffs.
That along with higher oil prices helped push Treasury yields upward in the bond market, resuming their climbs following a sharp slowdown the day before. Yields have been climbing in bond markets worldwide on worries about high inflation because of expensive oil caused by the war with Iran. That in turn is slowing economies and weighing on prices for stocks and all kinds of other investments.
Besides driving up rates for mortgages, high yields could also curtail companies’ borrowing to build the AI data centers that have been supporting the U.S. economy’s growth recently.
The yield on the 10-year Treasury rose to 4.61 per cent from 4.57 per cent late Wednesday.
Elsewhere on Wall Street, Walmart fell 5.9 per cent following its profit report. The retailer delivered another quarter of impressive revenue but offered up weaker forecasts for upcoming profit than analysts expected.
Walmart has resonated with Americans who have grown increasingly cautious about where they spend their money with inflation taking a bigger bite out of paychecks, particularly since the start of the Iran war in late February.
In stock markets abroad, indexes dipped across Europe following big jumps in some Asian markets.
South Korea’s Kospi Kospi soared 8.4 per cent thanks to strength for technology stocks. Samsung Electronics jumped 8.5 per cent after its labor union and management reached an agreement late Wednesday that averted a potentially costly strike. SK Hynix, a chip company partnering with Nvidia, surged 11.2 per cent.
Tokyo’s Nikkei 225 jumped 3.1 per cent after the government reported that Japan’s exports rose nearly 15 per cent in April from a year earlier, despite shocks from the Iran war, though indexes fell one per cent in Hong Kong and two per cent in Shanghai.
Stan Choe, The Associated Press. AP Business Writers Matt Ott and Elaine Kurtenbach contributed.